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Court Grants Stay of FCC's Leased-Access-Rate Reduction

Saying that the cable industry has shown "some likelihood" of suffering irreparable harm and has the potential for winning on the merits, the Sixth Circuit Court of Appeals stayed enforcement of the Federal Communications Commission's leased-access-rule changes until the National Cable & Telecommunications Association can make its case against them in court.

The NCTA also sought a stay of the rules at the FCC, but the commission has not ruled on that request and FCC chairman Kevin Martin indicated that he did not favor it.

The NCTA also asked that the case be moved to the D.C. Circuit in Washington, but the Sixth Circuit nixed that.

The rules have not yet gone into affect. The FCC in February released the order lowering the rates cable could charge leased-access programmers, but it did not send the draft to the Office of Management and Budget until April 28, and the OMB has up to 60 days to vet them per the 1980 Paperwork Reduction Act.

C-SPAN, TV One, Discovery Communications and A&E Television Networks, which joined the NCTA in the challenge, told the court that without the stay, the changes would cause "irreparable harm" and "infringe on cable programmers' First Amendment rights."

They argued that the FCC's decision to cut the rates cable can charge for government-mandated lease of channels will reduce the cost effectively to zero. The result, they said, will be "displacing and damaging" existing networks.

Because the FCC requires that access channels be carried on tiers reaching at least 50% of subscribers, the networks argued to the U.S. Court of Appeals for the Sixth Circuit that existing channels will be moved or dropped or never added due to limited capacity.

The FCC voted in November to lower the rates cable operators charge and speed up the complaint process. The commission’s majority argued that the change would lead to greater program diversity.

The FCC opposed the stay, disputing the merits of their argument and the merits of the challenge since it said the NCTA did not exhaust its administrative remedies. The court disagreed.

The NCTA filed suit against the new rules March 13, calling the decision arbitrary and capricious and a violation of procedure, but also threw in “unlawful burden on speech" (First Amendment) and an unconstitutional "uncompensated taking of private property" (Fifth Amendment).

The programmers argued that instead of promoting diversity, the new rules will hurt diverse networks like African-American-targeted TV One.

Charlie Stogner of the Leased Access Programmers Assocition, who had been trying to find out what rates he would have to pay operators, said he was "disappointed" by the decision.

John Eggerton
John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.